AN ACT CONCERNING THE MUNICIPAL EMPLOYEE RETIREMENT SYSTEM CONTRIBUTION RATE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 7-440 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(a) Each member shall contribute to the fund:

(1) (A) Prior to January 1, 2013, five per cent, (B) on and after January 1, 2013, six per cent, and (C) on and after January 1, 2015, eight per cent of his or her pay as to that portion of pay with respect to which contributions are not to be deducted under section 7-453; and

(2) (A) Prior to January 1, 2013, two and one-quarter per cent, (B) on or after January 1, 2013, five per cent, (C) on or after January 1, 2014, six per cent, and (D) on or after January 1, 2015, eight per cent as to that portion of pay with respect to which contributions are to be so deducted, to be deducted from such pay by the municipality and forwarded not less frequently than once a month to the Retirement Commission to be credited to the fund.

(3) In the case of [members] a member serving with the armed forces of the United States in time of war, hostilities or national emergency or any acts incident thereto, as provided in section 7-434, the municipality shall forward to the Retirement Commission the contribution required for such member under subdivisions (1) and (2) of this subsection to be credited to the fund [a like contribution] on behalf of such member based upon his or her pay at the time of entering such service.

(b) (1) Any member leaving the employment of the municipality before becoming eligible for retirement may withdraw on request to the Retirement Commission the total of all contributions made by him or her, including contributions made to another system and transferred to the Municipal Employees' Retirement Fund under the provisions of section 7-442b, less any retroactive contributions payable by such member under section 7-453 to the Old Age and Survivors Insurance System which have been paid from the fund under the provisions of section 7-451, provided, if no request is made within [ten] five years, such contributions shall revert to the fund. The withdrawal of contributions shall include interest credited from July 1, 1983, or the first of the fiscal year following the date of actual contribution, whichever is later, to the first of the fiscal year coincident with or preceding the date the employee leaves municipal service. Such interest shall be credited at the rate of five per cent per year. In addition, for the partial year during which the employee leaves municipal service or withdraws his or her contributions, whichever is later, interest shall be credited at the rate of five-twelfths of one per cent multiplied by the full number of months completed during that year, such interest rate to be applied to the value of contributions including any prior interest credits as of the first day of that year.

(2) Any employee who withdraws his or her contributions from the fund and is subsequently reinstated shall not receive credit for service for such prior employment in the computation of his eventual retirement allowance unless the withdrawn contributions plus interest, if any, have been repaid with additional interest at a rate to be determined by the commission.

(3) Any municipality which has made contributions on behalf of any member serving in the armed forces who is not reemployed by the municipality within six months following the termination of such service, unless this period is further extended by reason of disability incurred in such service, shall be entitled to receive from the fund on application to the Retirement Commission the amount of [such] his or her contributions. Any municipality which has made contributions in accordance with subsection (b) of section 7-436b on behalf of any member who leaves the employment of the municipality and withdraws from the municipal employees' retirement system before becoming eligible for retirement shall be entitled to receive from the fund on application to the Retirement Commission the amount of such contributions.

(4) In case of the death of a member before retirement, who has not elected a retirement income option in accordance with the provisions of this part or who has made such election but has not completed the age and service requirements that would permit him or her to retire on his or her own application, or after retirement without having made such election, or in case of the death of the survivor of a member who has made such election and his or her spouse after a retirement allowance has become payable, his or her contributions to the fund plus such five per cent interest, if any, less any retirement allowance paid to him or her or his or her spouse, and less any retroactive contributions paid by such member to the Old Age and Survivors Insurance System which have been paid from the fund under the provisions of section 7-451, shall be paid from the fund on the order of the Retirement Commission to the beneficiary or beneficiaries, if any, named by such member. If no named beneficiaries survive the member, or the survivor of the member and his or her spouse, payment shall be made to the executors or administrators of such member or his or her spouse, as the case may be, except that, if the amount is less than five hundred dollars, the refund may be made, at the option of the Retirement Commission, in accordance with the terms of section 45a-273.

Sec. 2. Subsection (b) of section 7-441 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(b) [All] (1) Prior to January 1, 2013, all participating municipalities shall pay monthly to the Retirement Commission to be credited to the fund such proportion of the pay of all members employed by such municipality as is determined from time to time by the Retirement Commission on sound actuarial principles to be necessary in addition to the contributions by members to provide future pensions based on service rendered by members subsequent to the effective date of participation as defined in section 7-427 other than the excess pensions referred to in subsection (a) of this section.

(2) On or after January 1, 2013, forty per cent of the amount to be paid by the municipality pursuant to subdivision (1) of this subsection may be deducted by the municipality from the pay of all members employed by the municipality. Such deduction shall be prorated for each member in accordance with the amount of such member's contribution under subsection (a) of section 7-440, as amended by this act.

(3) In the case of members serving with the armed forces of the United States in time of war or hostilities or national emergency, whether declared or undeclared, or any acts incident thereto, as provided in section 7-434, the municipality shall forward to the Retirement Commission to be credited to the fund a like contribution based on the pay of such member at the time of entering such service, in addition to paying the member's contribution as provided in section 7-440, as amended by this act. If such member is not reemployed within six months following the termination of such service, unless this period is further extended by reason of disability incurred in such service, the municipality shall be entitled to receive from the fund, on application to the Retirement Commission, the amount of [such] his or her contributions.

(4) If the Retirement Commission should find that the payments made to it under this subsection by any municipality have been more than sufficient because such municipality has elected to provide Social Security coverage for its employees, the commission, using sound actuarial principles, shall determine a refund, or a credit which shall be applied to the payments required of the same municipality under subsection (a) of this section in a manner to be determined by the commission. Any refund or credit received by a municipality shall be refunded or credited to the municipality and each member employed by the municipality in the same proportion as the amount contributed pursuant to subdivision (2) of this subsection.

Statement of Purpose:

To increase the contribution rate for members of the municipal employee retirement system.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]